China, for example, allowed an extraordinary surge in exports and the current account surplus to mask the development of an increasingly unbalanced domestic economy. Chinese household consumption collapsed from an already very low share of 46 per cent of gross domestic product in 2000 to a mere 35 per cent in 2008.

Partly as a result of its decision to keep the exchange rate down, China emerged as the world’s largest surplus country, with a current account surplus peaking at 11 per cent of GDP and foreign currency reserves of about 50 per cent of GDP. These were foolish investments, made as a result of foolish policies. It is absurd for China’s leaders to complain about China’s consequent (and entirely unnecessary) vulnerability to US fiscal and monetary policies.

Meanwhile, the US and a number of other western countries allowed the supply of cheap foreign savings, partly from China, to encourage a huge surge in household debt, private consumption, residential construction and financial sector leverage. While the excess savings of the emerging world were not the principal cause of the financial crisis, they were a contributory factor.